Overextending Term Transformation
Investors would generally like to invest their money so that it is available at short notice. Debtors, however, need long-term credit. An important job of banks is to manage transformation of differing term needs. This functions as long as investments are in fact held long-term or replaced by new ones, because capital providers have confidence in the security of their investments. Those who do not see term transformation as the banks' necessary economic task, but instead raise it to the level of a business model in order to conceal weak yields in the core business, are irresponsibly causing systemic risks, since once confidence in banks is shaken, refinancing problems can quickly turn into a conflagration.